American Airlines has warned that airline passengers might eventually have to pay higher prices for their tickets if the price of oil remains high, prompting air carriers to remove the number of seats from the overall market.
The prices of oil have increased by almost 50% in comparison to those from last year and that has put a great deal of pressure on profits for the airlines.
CEO of American Doug Parker said the prices remain at this level to a point where it becomes normal then over time you would see less growth and capacity across the industry and that would mean higher prices, but that should not happen in the short term.
IATA, which represents close to 280 airlines that equals 83% of the air traffic globally, said it would revise its forecast down on Monday for profitability across the industry this year because of the higher prices of oil, labor costs and infrastructure.
The U.S. in May agreed to a deal in January with the United Arab Emirates with Qatar resolve the claims of three of the largest U.S. carriers that the airlines in the Gulf had received subsidies that were unfair from their governments.
Parker said that he had been pleased with results from the talks yet he needed to see more from carriers in the Gulf prior to American Airlines could take into consideration a possible partnership with them.
Parker added that American have not had sufficient time to make sure those resolution have an overall effects that its hoped for, so that is something that needed to be waited on to see firsthand.
Qatar Airways at one time was planning to acquire a stake last year in American Airlines, but that decision was reversed as the airline said an investment would not meets the company’s objectives. Executives at American had been against the share purchase.
On Sunday, when asked if he was open to Gulf airlines investments in the futures, CEO Parker said that the airline did not have to have those types of transactions.
However, he added that the company was open to investments form any company.